R1.25 trillion and counting: Magnus Heystek on the decade SA moved its money offshore

In February 2015, a single line in the Budget lifted South Africans' offshore investment allowance from R4m to R10m — barely noticed at the time. A decade on, Brenthurst Wealth's Magnus Heystek — once branded "Dr Doom" for urging clients offshore — tallies the result: roughly R1.25 trillion legally externalised, now arguably worth R2 trillion-plus thanks to rand depreciation and global equity gains. He unpacks where it went, why local asset managers like Coronation stagnated while Allan Gray and Ninety One thrived, and why he believes this "internationalisation of household balance sheets," not capital flight, is why older South Africans have largely stopped emigrating..By Magnus Heystek*.When the announcement was made in the February 2015 Budget, it went almost unnoticed. In fact, it was a single-line entry in the supplementary budget and was mostly missed by the pack of media commentators and analysts.But there it was: a massive jump in the foreign investment allowance from R4m to R10m while the annual single discretionary allowance (SDA) was increased to R1m per year as from 1st April 2015.It took a few days to realise that exchange control for 99% of SA taxpayers had been scrapped. The floodgates to offshore investments were opened, and what followed, over the past ten years and more, has been the largest transfer of wealth in SA's history.As this article will show, more than R1,3 trillion has legally left South Africa from 1st April 2015 to the end of 2025, dramatically changing the investment world for South African investors and their advisors.The biggest casualty of this massive capital outflow was local asset managers, who battled vainly to stem it, with little success. Campaigns were launched proclaiming "local is lekker" and anyone who advocated offshore investments, as I did, was labelled as a doomsayer, disloyal and in some cases as stupid.Some analysts called it "capital flight" in an attempt to attach a negative connotation to this trend, but it was purely a natural reaction from wealthy and sometimes not-so-wealthy investors trying to put some distance between the engulfing chaos and their wealth. I would call it smart.In 2016, SA's then-foremost finance publication, Business Day, called me Dr Doom for strongly recommending offshore diversification to retail investors. One of its regular commentators, Dr Stuart Theobald, wrote an article about how readers/investors should ignore the calls from those who advocated offshore investments, calling it a circus. He neglected to mention that the Johannesburg Stock Exchange was his client.But the industry underestimated the massive demand for offshore diversification. Institutions that tried to stem the tide have seen little growth in their respective asset bases. Most local asset managers without a compelling offshore offering have seen very little in new flows.Coronation's AUM, for instance, tells the story. AUM in 2015 was R 610 billion. Today it's hardly much higher at R778 billion after 10 years of growth. I suspect the same has happened with all the major players, while the smaller outfits have seen their AUMs shrink considerably.The biggest gainers most probably would be Allan Gray with its established Orbis-range of funds and Ninety One, which long ago made their move offshore. But today most SA investors have become familiar with global giants such as Vanguard, BlackRock, Templeton and Fidelity, for instance.Even today, there are some asset managers vainly trying to make a case for local investments, on the basis that it is "very cheap". That might be the case, but that's not what private investors want. They want their discretionary investments in another jurisdiction at any cost.Today, the current value of privately held portfolio assets—which I estimate at around R3 trillion—is worth more than locally held investments in share portfolios, collective investments, or other equity-based portfolios. HOW MUCH HAS MOVED OFFSHORE?So how much was actually transferred out of SA and where was it mostly invested?The difficulty is that neither SARB nor SARS publishes a simple table saying, “South Africans have used Rxxx trillion of the R10m allowance since 2015.” However, one can get surprisingly close from the Balance of Payments reporting codes used by banks.My estimate: roughly R1.2–R1.3 trillion has been externalisedCurrency Partners data published by Ninety One shows the amounts transferred by South African residents under the relevant individual investment categories — BoP codes 511 and 512 — from 2016 to 2025. The chart implies approximately:Year Offshore investment flows2016~R85bn2017~R84bn2018~R66bn2019~R66bn2020~R127bn2021~R158bn2022~R137bn2023~R137bn2024~R165bn2025~R160bn 2016–2025~R1.18 trillionThe figures above come from the Currency Partners chart, so they should be treated as approximate rather than audited annual totals. Ninety One explicitly says more than R160bn was externalised in 2025 alone and that utilisation of offshore allowances has increased materially over the decade.Even the massive bull market and stronger rand in 2025 stopped money from flowing offshore. In fact, many investors see the rand's current strength as an opportunity to remit more money. They are not swallowing the economic Kool-Aid served by certain gung-ho economists and fund managers,Adding a reasonable R50–R70bn estimate for April–December 2015 takes the cumulative figure since the R10m regime began to approximately:R1.23 trillion to R1.26 trillion of gross capital transfers.I would therefore use about R1.25 trillion as the best defensible headline number.There is an important qualification. The Currency Partners series combines BoP 511 and 512. Code 512 specifically refers to foreign investment by a resident individual “in respect of the investment allowance”, whereas 511 covers individual foreign investments not specifically related to that allowance. The permitted categories include shares, bonds, money-market instruments, foreign bank deposits, collective investment schemes, property and “other”.So R1.25 trillion is broader than the R10m FIA alone. Unfortunately, publicly available data does not cleanly split the two series. My judgement is that the true amount transferred specifically through the R10m/FIA channel is probably around R800bn–R1.0 trillion, with the balance going through the smaller discretionary-investment channel and related classifications.Where has the money gone?I suspect the overwhelming majority has not gone into foreign bank accounts or villas. It has gone into global financial assets.My approximate allocation of the cumulative capital would be:Global equities and equity funds — 55–65%.This would include direct holdings in companies such as Microsoft, Apple, Amazon, Alphabet, and Nvidia, but more importantly, global unit trusts, ETFs, offshore wrappers, and discretionary portfolios. The popularity of offshore collective investments is substantial: by the end of 2024, foreign-currency collective investment portfolios available to South Africans held about R975bn in assets, with 727 offshore portfolios registered for sale.Foreign cash, money-market funds and bank deposits — 10–15%.Particularly during periods of political uncertainty or sharp rand weakness, investors often externalise the capital first and decide where to invest later.Global bonds and fixed income — 10–15%.Mostly through global bond funds, income funds and private-bank portfolios.Offshore property — perhaps 5–10%.London, Mauritius, Portugal, Dubai, Australia and increasingly the US would probably dominate. Property purchases are explicitly permitted under the FIA reporting categories.Private equity, trusts, structured products, crypto and other assets — perhaps 5–10%.WHAT IS IT WORTH TODAY?Another point is easy to miss. R1.25 trillion transferred is not the same as R1.25 trillion sitting offshore today. Some money has been repatriated, spent, used to buy property, transferred to children, or restructured. Conversely, money invested offshore ten years ago has appreciated enormously because of both global equity-market growth and rand depreciation.For example, money invested offshore in 2016, when the average rand was around R14.70/$, has since benefited from the weaker rand as well as the long rise in global equity markets. The Currency Partners data shows average exchange rates ranging from roughly R13–R16/$ in the earlier years to around R18/$ in 2023–25.The number I find more interestingIf roughly R800bn–R1 trillion of the original transfers went into growth assets, the current market value of the wealth created from these transfers could easily be R2 trillion or more.That is economically much more significant than the original capital outflow. South Africa has effectively developed a large pool of privately owned foreign assets belonging to households, entrepreneurs and high-net-worth investors.It also helps explain an apparent paradox: South Africa today has a positive net international investment position. As of June 2025, the country's foreign assets exceeded foreign liabilities by approximately R2.475 trillion.So what is sometimes described simply as “capital flight” is partly something else: South African households have been systematically internationalising their balance sheets.It is still not clear today what prompted the government to increase the offshore allowances—first introduced in 1998—by a massive 150%. No one discussed it beforehand, nor was it even remotely speculated on. Some cynical commentators suggested it was a way for the looters of the Gupta-billions to externalise some of their loot legally, but this could never be proven.One consequence of this relaxation — as I mentioned during a speech at the Biznews Conference earlier this year—was that SA has actually become a better place for many middle-aged and older individuals who might have been considering emigration, given the chaos that ruled at the time (and still does).Emigration amongst older people has completely dropped off and is now mainly concentrated on young graduates who leave in search of discrimination -free job opportunities elsewhere, mainly the UK, Australia and New Zealand..Read more:.Magnus Heystek: Why I (and my clients) still prefer offshore investments.Mom and Pop are happy to stay in SA with their circle of friends, family and hobbies—but the nest egg is offshore!This applies to me. I don't want to emigrate— even though I spend a lot of time in Mauritius—but it's comforting to know there is a Plan B in action if living in SA becomes totally unbearable or unsafe..*Magnus Heystek is the founder and chief investment strategist at Brenthurst Wealth.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

R1.25 trillion and counting: Magnus Heystek on the decade SA moved its money offshore

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